2019 Outlook
March 13, 2019
2020
GE Investor
Outlook
March 4, 2020
2
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3
2020 GE Investor Outlook
Overview
Deleveraging update
Business updates
Aviation
Power
Renewable Energy
Healthcare
Capital
Consolidated financials & wrap-up
Q&A
1
2
3
4
5
Today’s Presenters
GE Chairman & CEO, Larry Culp
GE Vice Chair & Aviation CEO, David Joyce
Gas Power CEO, Scott Strazik
Power Portfolio CEO, Russell Stokes
Renewable Energy CEO, Jérôme Pécresse
Healthcare CEO, Kieran Murphy
Capital CEO, Alec Burger
GE Investor Relations VP, Steve Winoker
Agenda
Overview
5
Key messages
Unlocking & delivering value as multi-year transformation accelerates
• Leading technology & service capabilities position GE to take advantage of robust long-term market
fundamentals … services ~50% of revenue; backlog of $405B, +15% Y/Y
• 2020 priorities are clear … solidify our financial position, continue to strengthen our businesses, & drive long-term
profitable growth
• Lean progress accelerating … running GE differently utilizing lean principles; embedded in 2020 outlook & will become
more evident through our results over time
• Tackling headwinds & more to do … continued pressure from COVID-19 & 737 MAX grounding; driving operational
improvement across all businesses with Renewable Energy a key focus in 2020
• Confident in GE’s capacity to deliver with foundational strengths … team, technology, global reach & capabilities
6
• COVID-19; macro trade environment; interest rates
• 737 MAX RTS, delivery profile & production schedule
• BioPharma timing of deal closure-a)
• Renewables: projects performance, working capital
• Monitoring insurance testing (not included in 2020 outlook)
Outlook assumptions
• Lost disposition earnings & cash flows: BP & BKR
• 737 MAX RTS mid-2020 aligned with Boeing … monitoring
• Focus on Renewables improvement, legacy run-off ongoing
• Continued progress in Power turnaround
• Aviation & Healthcare continued strength; backlog growth
• Capital earnings lower
• Enhanced operational rigor & cost management
• Non-operational cash headwinds diminish, but remain
Key variables
2020 overviewRevenues
Free cash flow
LSD(Industrial organic*)
$2B to $4B(Industrial FCF*)
Margins
EPS
0 to 75bps expansion(Adjusted GE Industrial
organic margin*)
$0.50 - $0.60(Adjusted EPS*)
* Non-GAAP Financial Measure
(a - BioPharma expected to close 1Q’20; final timing subject to regulatory approvals & other closing conditions
Positive trajectory heading into 2020, despite areas of uncertainty
7
Focus: COVID-19 as of today
Situation is fluid, monitoring closely … COVID-19 impact not included in full-year 2020 outlook beyond 1Q
GE supply chain
• All but 2 China sites restarted after extended Chinese New Year
• Reduced operating capacity at GE & supplier shops ... tracking
demand & supply chain impacts daily
GE priorities
• Committed to the health, safety, & security of our employees
• Ensuring business continuity with customers & suppliers
• Supporting medical equipment needs in affected areas
GE operations
• Full-scale, global preparation under way & continuous monitoring
• ~18K employees in China; ~2K in Hubei province
• China represents ~9% of annual Industrial segment revenues …
important market for GE; ~10% GECAS exposure
* Non-GAAP Financial Measure
(a - based on FlightAware departure data on GE fleet from Jan 21, 2020 to Feb 28, 2020
Near-term view of GE impact
China & ROW air traffic demand impact
• GE fleet departures in China down ~60%-a)
• Reduced services billings
• Monitoring airline credit profiles
China commercial demand impact
• Primarily HC; some Power & Renewables
Supply chain impact in all businesses
• HC near term, longer-cycle BUs over time
Impact - too early to assess full-year 2020
• Estimated $(0.3)-$(0.5)B FCF* & $(0.2)-
$(0.3)B operating profit impact in 1Q
• Impact embedded in 1Q estimates of
~$(2)B FCF* & ~$0.10 adjusted EPS*
Deleveraging update
9
2020F actions
Sources of cash
BioPharma-a) ~$20
Baker Hughes TBD
2020F
* Non-GAAP Financial Measure(a - BioPharma expected to close 1Q’20; final timing subject to regulatory approvals & other closing conditions
($ in billions)
$20 +BKR
GE Pension Plan contributions
Intercompany loans
External maturities
Additional actions
$4-5
12
1
~5
~$23
• Evaluating additional actions … balance deleveraging impact, economics, risk mitigation, optimal capital structure
• Monitoring interest rates; COVID-19
Improving our financial position: GE Industrial deleveraging
Leverage: net debt* / EBITDA*
Continue to target <2.5x net debt* / EBITDA* in 2020
2019 2020F
4.2x
<2.5x
• Plan to complete remaining deleveraging actions in 2020
2018
4.8x
Business updates
11
Aviation - key messages
Strong fundamentals … managing short-term challenges
• Total backlog at record high of ~$273B … up 22% in 2019
• Commercial portfolio secured for the future … GE9X in flight test on Boeing 777X
• Growing military business … generational wins with strong growth in technology programs
• 737 MAX … supporting safe return to service in mid-year time-frame
• LEAP production capacity reduced & reallocated … ~1,400 engines to deliver in ’20 & growing in outyears
• COVID-19 affecting global travel … impact in ’20 due to slowdown in hours flown & material demand
12
Revenue:
Segment margin:
Free cash flow*:
2020F
LSD*-a)
~20%
Flat to up
2021F
Growing*-a)
Flat to growing*-a)
Up
2019
$32.9B
20.7%
$4.4B
Aviation - outlook
* Non-GAAP Financial Measure
(a - Organic basis
• Demand for air travel & strength of installed
base drives aftermarket growth
• LEAP production ramp accelerates
• GE9X enters airline service
• Continued military growth in production,
development & services
• Anticipating slight contraction in demand with
strong underlying fundamentals for air travel
• Military revenue growing low double digits
• Certainty on LEAP-1B cash flow & production
• Aligning cost structure with revised production
plans while protecting our ability to ramp
2020 2021+
Strengthening our industry leadership & delivering on our commitments
13
Aviation - free cash flow*
$6.3 UpNet earnings ex D&A
(1.8) BetterWorking capital
0.6 LowerContract assets
0.4 LowerOther CFOA
2019 2020F
$5.6 Flat to upCFOA
(1.1) BetterGross Capex
$4.4 Flat to upFCF*
2020 dynamics
($ in billions)
* Non-GAAP Financial Measure
Refer to page 47 for additional information on free cash flow components
• Working capital improvement driven by collections
for LEAP-1B & lean inventory management
• Contract assets decline due to reduced air travel
• Other CFOA down primarily driven by timing of
discount & allowance payments
• Capex reduced as a result of lower MAX installed
base & monthly production rates
Portfolio fundamentals support long-term free cash flow* growth
14
Focus: Commercial outlook
Commercial backlog
30
226
2019
$256
y/y
22%
Services
Engines
9.0 Down DD
15.2 MSD
2019 2020F
Sales
Services
Engines
$24.2 ~Flat
Installed base
37.8K ~40K
~5.4K ~LSD
Production units
~2.9K Down DD
Financial highlights
• ~1,400 LEAP 2020 deliveries
• Reallocate capacity to delinquency
and growth in military & commercial
• MSD growth driven by CFM & GE90
• Strong growth continues over a five-
year forecast horizon
• GEnx & LEAP shop visits growing
double digit over the same time
period
Services Performance
Production
($ in billions)
WWSV-a)
(a - World-wide shop visits ex-LEAP
15
Focus: watch list items
737 MAX impact
• Payment terms secured with Boeing on 2020 deliveries &
parked aircraft
• Production volume secured for 2020 & 1H’21 and
communicated to suppliers
• Plan in place to realign cost base, capex & capacity
• CFM ready to protect future ramp … mid-term targets
reassessed after return to service
($ in billions)
* Non-GAAP Financial Measure
(a - Source: IATA COVID-19 initial impact assessment February 20th, 2020
(b - Baseline month, prior to impact per IATA forecast
Experienced team … closely monitoring COVID-19 & managing through 737 MAX dynamics
COVID-19 impact
IATA APAC RPK forecast-a)
• Dramatic contraction in demand in APAC after COVID-19
• APAC air travel demand now 35% of global air traffic
• Estimated ~$(0.2) - (0.3)B FCF* impact in 1Q’20
255
184159
Dec/Jan Jan/Feb Feb/Mar
Billion RPKs per month (seasonally adjusted)
-b)
(28)% (38)%Versus
Dec/Jan
16
2.33.1
2019 2025F
Focus: commercial portfolio transition to next gen
(a - 2019 LEAP-1B installed base includes grounded A/C but not undelivered units in storage(b - Cirium database plus spares(c - 6 month rolling average per UBS as of mid-April ’19(d - Airfinance Journal as of April ’19
Widebody Big Twins
3.0 2.5
1.6 3.0
2019 2025F
GEnx
CF6
GE9X
GE90
Narrowbody
• 2,590 orders & commitments-b)
• 13% better utilization-c)
• Ranked #1 by lessors-d) … $1.6M
residual value advantage-e)
• 700+ orders & commitments-b)
• 5% better fuel efficiency vs. any
engine in class
• Engine certification in 2020
• 19,000+ orders & commitments-b)
• 6% higher utilization-c)
• Ranked #1 by lessors-d) … $1.4M
residual value advantage-f)
22.6 19.8
2.0-a)16.0
2019 2025F
LEAP
CFM
4.6
5.5
24.6
35.8
2.3
3.9
0.8
(e - Cirium database for GEnx & LEAP(f - Cirium data based on a LEAP-1A ship set comparison (2 engines)
CFM is a 50/50 Joint Venture between GE & Safran Aircraft Engines; LEAP is a trademark of CFM International
(Installed base - units in thousands)
Delivering on our commitments to our customers & our investors
17
Focus: Military outlook
Budget dynamics GE revenue outlook Generational competitions
• 2% growth in research & technology
(RDT&E)
• Flat growth for operations &
maintenance … procurement down
4.8%
• International defense budgets also
increasing ~3%-c)
• ‘19 revenue $4.4B, $(0.3)B lower than
forecast driven by capacity constraints
• ‘20 delinquency reduction through
utilization of LEAP capacity
• MSD growth on core engine production
• Investing in new upgrades to grow
aftermarket spares/services
✓ Next gen Apache & Black Hawk (T901) …
$0.5B development … $20B life of program
✓ Next gen trainer (F404) … $5B life of program
• Next gen combat engine (XA100) … ~$50B
opportunity
• Advanced development programs … ~$35B
opportunity
LDD
2019 2020F
634 636
79 69
2020 enacted 2021 Pres.
budget
$713 $705
OCO-b)
Base
Military revenueUS DOD budget-a)
LDD
2019 2020F
(a - DoD comptroller FY2021 budget request
(b - Overseas contingency operations
(c - Forecast International
(d - Includes GE & externally funded R&D
($ in billions)
Strong 2020 & reaffirming growth for Military business through 2025
$4.4$0.7
Military total engineering effort-d)
18
Power - outlook
Revenues:
Segment margin:
Free cash flow*:
2019 2020F
LSD*-a)
Expanding*-a)
Better
but negative
2021F
~Flat to LSD*-a)
Expanding*-a)
Positive
• Stable new unit gas segment w/ higher equipment revenues from B/L
• Improving outage execution & cost out to expand services margins
• Fixed cost* out & FCF* improvement in Gas
• Managing through COVID-19 volatility
• Portfolio: optimizing cost structure including right-sizing footprint,
further improving operations, managing project settlements
• Continued focused on underwriting, cost out & project management
• Investing in customer solutions, execution for increased productivity,
& further installed base penetration
• Lean progress takes hold ... operational improvements & productivity
• Portfolio: right sizing & continued value creation
$18.6B
2.1%
$(1.5)B
* Non-GAAP Financial Measure
(a - Organic basis
2020 2021+
Progress in 2019 with further operational improvements expected 2020+
19
Gas Power - key messages
• Signs of progress across the business: cost, margins, cash … still early but encouraging
• Gas turbine segment stabilizing … gas most accessible, dependable, economic complement to renewables
• Services performing as expected … stable contractual book, margin growth in transactional, upgrades down
but stabilizing
• Fixed cost* out on track … (10)% in ’19, with incremental (10)% in ’20 … $2.8B fixed cost* structure in ‘20
• FCF* significantly improved in ’19 with further improvement in ’20 … return to positive FCF* in ’21
* Non-GAAP Financial Measure
Encouraged with year 1 results in multi-year turnaround … more work ahead
20
Gas Power - business dynamics($ in billions)
~$4 ~$4HSD*-a) ~Flat*-a)
2018 2019 2020F 2021F
Building foundation to deliver HSD Op profit margins & positive FCF* by 2021
Equipment Services
• Technology well positioned for industry demand
• Projects stabilized in ’19, confident of accreting margins on
backlog entering ’20
• Supply chain momentum on lean … more steady output
projected in ‘20 & ‘21 relative to prior years
Revenue ‘20-’21 margin
outlook
Expanding
Revenue ‘20-’21 margin
outlook
Expanding
• Valuable $55B contractual backlog with steady utilization, margins,
& cash flow … focused on outage planning & execution
• Transactional margin expansion on track with pricing & cost actions
… topline flat but further installed base penetration a focus
• Upgrades down in ‘19 as expected, increasing investment to remain
provider of choice & enable customer & fleet competitiveness
~$9 ~$9 ~Flat*-a) Flat/LSD*-a)
2018 2019 2020F 2021F
* Non-GAAP Financial Measure
(a - Organic basis
21
Focus: Gas Power equipment project backlog
Stabilized, lower-risk project backlog
Backlog evolution Progress
✓New deal underwriting implemented in ’17
✓Depleting turn-key backlog; more power islands in new projects mix
✓Calibrating risk on extended scope … contingencies built-in
Underwriting: implemented standard work procedures governing
costing, EPC partner underwriting & financial returns
Execution discipline: focused on customer quality & delivery …
standard monthly project reviews & performance metrics
Margin expansion: culture of product & project cost-out
Team: strengthened central projects expertise & regional
leadership … earlier engagement throughout deal lifecycle
~60%~30% ~10%
~40%~70% ~90%
Post-’16
2016 &
prior
2017 2018 2019
Turn-key (TK) backlog
~$5.5B $4B~$5B
% Project contingency
~1% ~3%~2%
Backlog underwriting vintage
22
Focus: lean as an enabler to service competitiveness
Continued focus on performing better for our customers
Strengthen planning & execution on contractual book …
expand improvements to TransactionalService outage process
See Plan Execute
‘20 focus areas
✓ See … ~100% 24 month outage visibility
✓ Plan … ~27 pts improvement in contractual outage preparation
✓ Execute … ~34 pts improvement contractual parts on-time delivery
~35-50% repair cycle improvement on 2 lean lines
‘19 improvement & outcomes
Resources: formal crew capability assessment ahead of outage
Scope: Engineering led scope assessments 18 months prior to outage
Plan …
Repair: implement 10 lean lines representing ~30% of global activity
Focus on ‘field’: putting the operator at the center … live escalation
mechanism for field teams
Execute …
Close-out: incorporate lessons learned, drive continuous improvement
Outage
activation
Fulfilment
operations
Execute Close
out
Scoping,
scheduling,
costing
Demand
placement
Outage
preparation
Continued opportunities in 2020+
~1K global outages/year
23
Power Portfolio - business dynamics
Business dynamics
($ in billions)
Better line of sight into these businesses … right sizing & continued value creation
Steam Power
• Right sizing for market outlook … already shifted footprint to Asia
• Stable services outlook … capture greater portion of installed base
• Growing Nuclear backlog … competitive steam turbine technology
GE Hitachi Nuclear
• Strong execution … growing services outage backlog & fuel bundles
• Supporting customers in reducing nuclear operating expenses
Power Conversion
• Focused sales perimeter … system & solution sales in key domains
• Reducing fixed cost* while delivering material & labor productivity
• Driving operating improvements through lean … quality, on-time delivery
4.4
0.9
0.7
$5.5-a)
2019 Revenue
Steam
Power Conversion (PC)
Nuclear
% services
~90%
~50%
~60%
* Non-GAAP Financial Measure
(a - also includes $(0.5) HQ/other
• Organic revenue* & margin* in 2020: up for PC, down for
total Power Portfolio driven by project timing
• FCF* down vs ‘19: managing project settlements while driving
sustainable operational FCF* improvements
24
Lean: enabler to operational improvements
($ in billions)
Executing on our strategic imperatives to return to profitability in 2021
Organization-wide engagement ... driving safety, quality, delivery
Actions to date
Plan for ‘20
• Ramping Kaizen events across 5 locations: OTD-a) > 90%, 4%+ labor productivity
• Product platforming to drive simplification, improved cost & delivery cycle times
2019 results
Path to profitability and improved cash conversion
Sales perimeter: exited non-profitable segments & re-
focused on profitable MV solutions in Marine, O&G, Industry
Cost out & cash flow: consolidated footprint with cost
actions; working capital improvements
Operational improvement: applying lean principles to
quality, customer on-time delivery, margin erosion
Op profit %
$1.0 $0.9
2018 2019 2020F
(31)% (20)%
MSD
(MSD)%
Sales
Nancy, France motor factory
✓Kaizen event Jan ’20
✓Daily visual management
Coil press change-over: 2 hrs→ 15 mins
Identified ~20% reduction in labor hours
Developed plan to lead-time 7 weeks
Campinas, Brazil motor factory
✓Multiple lean Kaizen events
✓Daily Gemba reviewing 21 boards
Machine uptime: Jan: 76% → Dec: 92%
On-time delivery: Jan: 0% → Dec: 55%
Over-dues: Jan: 105 → Dec: 17 units
Focus: Power Conversion
Go forward expectations
(a - On-time delivery
25
• Renewable Energy market will remain a tailwind … capacity additions in solar, wind, new technology will
continue to reduce levelized cost of energy
• Three distinct operating dynamics … Onshore Wind, Offshore Wind, Grid/Hydro
• Leadership team focused on operational rigor, cost control, & cash discipline
• Product cost-out, services growth, & execution will improve Onshore Wind margins
• Comprehensive portfolio … generation, storage, & transmission capabilities for baseload solutions
Renewable Energy - key messages
Focused on delivering profitable growth & executing turn-arounds
26
Turnarounds:
Grid & Hydro~$5B
‘19 Revenue
Core:
Onshore + LM
~$10B
‘19 Revenue
Future growth:
Offshore
~$0
‘19 Revenue
‘20 - ‘21F trends
Revenues Op profit%
’20 Up Expanding
’21 Flattening Expanding
’20 - ‘21F trends
Revenues Op profit%
’20 Up Improving
’21 Up Improving
’20 - ‘21F trends
Revenues Op profit%
’20 Down Improving
’21 Flattening Improving
Renewable Energy - three operating dynamics
Expect margins to improve with better execution & Grid and Hydro turnarounds
• Deliver volume, services penetration,
margin improvement
• Haliade-X prototype running, ~5GW
commitments to date
• New leadership teams, right-sizing to remain
competitive, stronger project execution
27
Renewable Energy - outlook
* Non-GAAP Financial Measure
(a - Organic basis
• Grow services penetration in all businesses & drive
productivity
• Continued cost productivity & SG&A reduction
• Onshore wind international growth offsets post-PTC
• Targeting ~$2B Offshore sales with positive profit &
FCF* mid-term
• Grid & Hydro get to break-even near term, then grow
• Deliver volume & expand margins in Onshore Wind
(US PTC & non-U.S.)
• Mitigate COVID-19 impact on global supply chain
• Convert Offshore commitments (~5GW), attain type
certification for Haliade-X
• Turnaround Grid & Hydro; new leadership team, right
sizing, & stronger project execution
Revenue:
Segment margin:
Free cash flow*:
2020F
LSD*-a)
Improving*-a) but negative
Lower
2019
$15.3B
(4.3)%
$(1.0)B
2021F
Up*-a)
~Break-even
Better, but still negative
2020 2021+
Operational improvements lead to strong profitable growth
28
Global Renewables capacity additions-a)
In Avg. GW/Year
74 84 105
5574
126
19
26
22
1
’17-’19 ’23-’30’20-’22
150
191
266
+29%
+39%
7
13
Utility-scale Solar PV
Utility-scale batteriesHydro
Wind
Onshore Wind & Solar, ’19 LCOE advantage-b)
GE Onshore Wind orders (GW ordered)
Onshore OPI -HSD ~flat +LSD(Orders Price Index)
2018
United States
International 63%
37%
71%
29%
56%
44%
2019 2020F
Renewable Energy - market environment
‘18 ‘22F‘19 ’20F ‘23F‘21F
45 45 47 47
‘18 ‘22F‘19 ’20F ‘23F‘21F
138
10 8 6 6
Source: BNEF 2019-12-18 - 4Q 2019 Global Wind Market Outlook
International 37
Onshore Wind forecastNew installs per year, in GW 56
United States
Growing, globalizing, stabilizing
(a - Source: Bloomberg New Energy Outlook NEO19 - June 2019. Utility scale Solar >1 MW
(b - Source: Bloomberg NEF. Note: based on levelized cost of electricity. Reflective of benchmark project for each technology financed in the last six months. CCGT: combined-cycle gas turbines.
Excludes subsidies and tax-credits.
29
• Offshore wind industry expected to reach 100 GW installed base by
2025/2026; 10GW+ per year going forward-a)
• Haliade-X 12MW creating customer value:
o First turbine above the 10MW threshold
o Industry leading capacity factor (63%-b)
o First 60+ GWh gross annual energy production turbine
• Almost 5GWs in commitments won in 2019:
o Orsted selected Haliade-X as the preferred wind turbine for
120MW Skipjack & 1.1 GW Ocean Wind projects (total 1.2 GW)
o Equinor-SSE selected it for Dogger Bank 1, 2 & 3 (total 3.6 GW)
• Haliade-X prototype installed in Oct ‘19; targeting 2H full type certificate
• Targeting cash positive mid-term with strong growth potential
Focus: Haliade-X 12MW … world’s most powerful turbine
Turbine launch proceeding as planned, strong commercial reception, generating revenue 2021+
(a - Source: BNEF 1H2019 Offshore Wind Market Outlook
(b - Typical North Sea conditions
The right turbine at the right time
30
Focus: 2020 execution
Pre ‘16 backlog
2018 2019 2020F
~$7~$5
~$1.5
Grid/Hydro: project execution & right-sizing footprint
• New Project Management Office strengthens deal approval & risk review processes
• On average, achieving as-sold margins for Grid/Hydro projects booked since ’17
• Significant reduction in low-margin pre-2016 deals
Onshore # units
1Q 2Q 3Q 4Q
~1,000
509
1,553
~9002020
2019
Cost out productivity %
Onshore product cost-out
LM Glass blades productivity
2018 2019 2020F
~7%~4% ~5%~4%
~10%
Onshore Wind: deliveries & product cost-out
• Robust fulfillment process (logistics/C&I), blade volume
• Quarter-over-quarter 2019 improvement of deliveries & predictability
• Continued focus on total product cost-out (including blade productivity)
• Improving customer experience, on-time delivery, reducing cost-of-poor quality
• Focus on services productivity … installed base penetration, deploying lean
initiatives, repower focus
• Targeting HSD services productivity in 2020, up from ~2% in ‘19
($ in billions)
31
Renewable Energy - free cash flow*
PTC-related dynamics in Onshore more than offsets FCF* improvement in other businesses
* Non-GAAP Financial Measure
Refer to page 47 for additional information on free cash flow components
• Onshore Wind North America down due to PTC cycle:
• Accelerated sales profile driving earlier build &
higher disbursements
• Lower progress collections on higher revenue &
lower orders
• Onshore Wind Int’l. ~flat … investing for ’21 growth
• Offshore Wind better … lower NPI spend
• Grid/Hydro up … further opportunity to improve Grid
working capital (payment terms, past dues)
20202019 2020F
Net earnings ex D&A $(0.5) Better
Working capital 0.9 Lower
Contract assets (0.5) Better
Other CFOA (0.4) Lower
CFOA $(0.5) Lower
Gross Capex (0.5) Better
FCF* $(1.0) Lower
2021
• FCF* better but still negative as US onshore working
capital cycle normalizes & earnings improve
32
Healthcare - key messages
• World-class Healthcare Systems & Pharmaceutical Diagnostics businesses … strong franchise
• Market fundamentals & Precision Health … focused on accelerating growth
• Leading global medical technology & digital solutions innovator … investing for the future
• Near to mid-term opportunities for operating margin & FCF* growth … deploying lean across the business
* Non-GAAP Financial Measure
Significant opportunity for value creation
33
Healthcare - outlook
Revenues:
Segment margin:
Free cash flow*:
2020F
LSD*-b)
Up (ex-BP)* -b)
Up (ex-BP)
2019
$19.9B
19.5%
$2.5B
• U.S. & EU stable; emerging markets more variable
• COVID-19: responding to needs, rebalancing supply
chain, also helps accelerate tariff mitigations
• Continued productivity: product & service cost, SG&A
• Increased R&D spend driven by digital solutions
• FCF* up (ex-BP) driven by income, working capital & non-
repeat of supply chain finance & monetization reductions
• LSD to MSD market growth
• Expanding R&D investment
• Organic margin expansion* 25 - 75 bps per year
driven by product/service cost out & G&A leverage
• FCF* conversion*-c) 85% - 95% of net income*
2020
2021F
Growing*-b)
Expanding*-b)
Up
(excludes BP)(assume BP closes 1Q’20-a))(includes BP)
* Non-GAAP Financial Measure
(a - BioPharma expected to close 1Q’20; final timing subject to regulatory approvals & other closing conditions
(b - Organic basis
(c - FCF* conversion*: segment FCF* / segment net income, adjusted to include restructuring expense
2021+
Leading global med-tech company; uniquely positioned to win in precision health
34
Focus: key updates since RSNA
Delivering on priorities Responding to COVID-19
✓ Localizing products in China: MR, CT, X-ray
✓ Investing in sales force, visibility: US & China
✓ Delivering efficiencies in structure & G&A
✓ Multiple lean AWOs: U/S lead time, LCS
scrap, inventory Kanban in MR, order-entry
✓ Improving on-time installation & delivery
✓ Launched 31 NPIs at RSNA with 61 in ’19
1. Ensuring safety of our employees & partners
− Daily monitoring of 7k+ employees in China
− Personal protection and enhanced protocols
2. Delivering on China’s needs
− Donated equipment & consumables
− Reprioritizing global supply to meet local needs
− Factories running throughout Chinese New Year
− Service/sales throughout country 24/7
3. Securing supply for China & world
− Accelerating NPIs in China: “Green Channel”
− Expanding local manufacturing capabilities
− Diversifying supply base, dual sources
✓ Launched 18 new Edison™ apps
35
GE Capital - outlook
Reported assets ex. liquidity*
Continuing earnings*-a)
Total debt
Liquidity
Debt/Equity
2019
$102B
$0.1B
$59B
$19.4B
3.9x
Improved outlook reflects simpler, more focused GE Capital
~$105B-b)
$(0.3) - $(0.5)B
~$55B
~$14B
<4x
2020F 2021F
Up
~Break-even
Lower
Lower
<4x
• Continue to support industrial … $5B+ enabled orders in ‘20
• Continuing income lower driven by lower asset base/gains
• Strong liquidity … lower driven by maturities, reduced sales
• GE parent support required in line w/ insurance stat funding
• Managing through COVID-19 volatility
• Drive lean culture across Capital businesses
• EFS maintains support for GE Power & Renewable Energy
• GECAS continues to generate strong earnings & returns
• Continuing income targeting to be break-even or better
• Insurance portfolio … driving operational improvement;
performance in line with rebuilt claim curves
• Maintaining leverage below 4x debt/equity
* Non-GAAP Financial Measure
(a - Continuing earnings excludes Insurance premium deficiency test & the 2019 tax reform impact
(b - Reported assets of ~$119B including discontinued operations, less liquidity of ~$14B
2020 2021+
36
Asia27%
Europe23%NA
20%
MAC20%
LAC10%
Region
Narrowbody59%
Widebody28%
Cargo6%
RJ + Turbo7%
Assets-a)
Focus: GECAS
Earnings
Reported Assets
2019
$1.0B
$38.0B
$0.9 - $1.0B
$38 - $39B
2020F
• Large & diversified asset portfolio (~59%-a) narrowbody)
• ~220+ global customers & strong deployment capabilities
• Average operating lease aircraft age ~6.8 years
Key dynamicsPortfolio Highlights
World class team & attractive asset class delivering strong returns
(a - % relates to commercial aircraft book only ($26B)
• MAX grounding … minimal impact to 2020 profile,
experienced team working to optimize outcome
• Robust market liquidity… numerous new entrants;
GECAS maintaining returns on new business & strong
execution on asset sales
• COVID-19 … closely monitoring credit impacts;
seasoned team managing through industry disruptions
37
Focus: North American Life & Health
Actively managing the business
• Strategic additions to management team to complement
existing leadership expertise & experience
• Driving premium rate increases … achieved statutory
approval for increases of 11% in 2019 across our primary
ceding companies
• New investment strategy partially offsetting impact of
lower interest rates … ~$2B re-allocated, moving towards
portfolio risk that will be in line with peers
• Clear communication of results & transparent disclosures;
leveraging external experts in evaluating portfolio
• Continuing to explore options to further reduce risk
Focused on driving economic value and reducing risk across the portfolio
Insurance update
• 2019 GAAP premium deficiency test resulted in $0.8B non-
cash after-tax charge driven by lower discount rates
• Statutory cash flow test completed with minimal incremental
impact to the permitted practice; $2.0B funded in 1Q’20
Impact on capital contributionStatutory cash flow test driver
Interest rates
Investment portfolio
Premium rate increase
Claims/other
Net impact
• Claim curves rebuilt in 2017 continue to hold
++
-
-+
~$(0.1B)
38
Corporate - outlook
Right-sizing cost structure & accountability … shifting center of gravity to the businesses
2018 2019 2020F 2021F
$1.3
$1.7
$1.4 - $1.5
~$1.0
Adjusted Corporate operating costs* Efforts continue to reduce cost
($ in billions)
Functions: e.g. central HQ, IT, HR, Finance, ~8k headcount
Operations: Digital & Lighting businesses, ~5k headcount
Eliminations: consolidation impact of intercompany sales
EHS & Other: primarily legacy site remediation costs
• Functions & operations cost down 8% in 2019
• ~8,500 headcount transferred from Corporate since Jun
’18 … third-party contracts signed at each BU & under
their control (e.g. Genpact); empowering business units
to retain or eliminate costs
• Adjusted Corporate operating costs* expected to be
lower … Digital improvement, elims, functional cost
• Corporate focus to remain on strategy, capital allocation,
research, talent, governance
* Non-GAAP Financial Measure
Consolidated financials & wrap-up
40
Earnings per share
2019 Adjusted EPS*
Industrial dispositions
GE Capital
Operations
Industrial interest & tax
2020F Adjusted EPS*
$0.65
(0.11)
(0.07) - (0.05)
0.02 - 0.07
0.01 - 0.04
$0.50 - 0.60
Adj. EPS
• Primarily BioPharma
• Lower base earnings on lower asset profile, less gains
• Power continues to stabilize, Renewables less negative, Aviation
up based on mid-year MAX return, better Corporate
• Interest lower post deleveraging; adjusted industrial tax rate high-
teens to low-20s
Industrial dispositions & GE Capital partially offset by stronger operations & lower interest
Portfolio
changes-a)
‘19
revised*
‘19
reported
GE Industrial revenue (GAAP)
Adj. GE Industrial profit*
Adj. GE Industrial profit margins*
$87.7B
$8.7B
10.0%
$(4.3)B
$(1.2)B
(1.0)%
$83.5B
$7.5B
9.0%
* Non-GAAP Financial Measure
(a - Impact calculated by adjusting 2019 financial impact of Industrial dispositions net of estimated 2020 financial impact of Industrial dispositions
41
Industrial free cash flow* walk($ in billions)
$2.3
2019
FCF*
Portfolio
changes
2020F
FCF*
$2 - $4
Earnings Inheritance
items/investments
Working
capital
Timing/taxes
& all other
• Improvement from inheritance items/investments incl. LTAR, pension, restructuring
• Working capital better due to MAX payment terms, non-repeat of certain factoring
run-offs, offset partially by Renewables PTC cycle reversing
• Other items include higher cash taxes, timing of discount & allowance payments
• Power: continued improvement in projects,
earnings, & W/C; inheritance items decrease
• Renewable Energy: PTC cycle driven
progress reversal in ‘20; improved earnings
& cash profile in Grid & Offshore Wind
• Aviation: COVID-19 variability; payment
terms secured with Boeing on ’20 deliveries
& parked aircraft
• HC: growth ex-BP at 85-95% conversion*-a)
• Corp: lower restructuring, interest, & cost
* Non-GAAP Financial Measure
(a - FCF* conversion*: segment FCF* / segment net income, adjusted to include restructuring expense
(b - Calculated by adjusting 2019 FCF* of $2.3B for the 2019 FCF* impact of Industrial dispositions, net of estimated 2020 FCF* impact of Industrial dispositions ($1.4B total from Portfolio changes)
to arrive at a revised 2019 baseline of $0.9B
Continued FCF* improvement in 2020 vs. revised 2019* baseline of ~$1B-b)
Segments
42
2019-2022 free cash flow* summary
Significant improvement 2020+ as we execute on our plan & headwinds diminish
GE Industrial
Power
Aviation
Renewable Energy
Healthcare
Corporate &
eliminations
$2.3
$(1.5)
$4.4
$(1.0)
$2.5-a)
$(2.1)
2019 2020F
$2 - $4
Better but negative
Flat to up
Lower
Up (ex-BP)
Better
2021F
Up
Positive
Up
Better, but still negative
Up
Lower
2022F
Up
Up
Up
Up & positive
Up
~Flat
* Non-GAAP Financial Measure
(a - Includes 12 months BioPharma (BP) FCF* of $1.3B; 2020 outlook assumes BP FCF* for one quarter
($ in billions)
43
Wrap-up
Priorities are clear
• Solidify our financial position
• Continue to strengthen our businesses
• Deliver long-term profitable growth
Where we’re headed
• Unlock & deliver value as lean transformation accelerates
• HSD+ FCF* margins*-a) for Industrial over time
Bedrock of strengths
• Team, technology, global reach & capabilities … more confident than ever that we can execute
Setting GE up for long-term success
* Non-GAAP Financial Measure
(a - Industrial FCF* / GE Industrial Revenues
Q&A
Appendix
46
• Mark-to-market remaining investment; impact treated as a non-GAAP adjustment to EPS
• Targeting deal close 1Q’20; final timing subject to regulatory approvals & other closing conditions
• Impact to supply chain & commercial; watch item. Impact not included in full-year 2020 outlook
• Down double digits (%) driven by deleveraging (e.g. 4Q’19 tender, interco. loan, 2Q’20 maturity)
• Both expense & cash lower
• Driven by BioPharma
• Down double digits (%)
• Adjusted high-teens to low-20s tax rate
Other Industrial items
Baker Hughes
BioPharma
COVID-19
Interest expense
Restructuring
Gains/losses
Non-op benefit costs
Tax rate
47
2019 free cash flow* by segment($ in billions)
GE
IndustrialPower
Renewable
EnergyAviation Healthcare
Corporate &
eliminations
Net earnings (loss) ex
depreciation, amortization,
goodwill impairments-a)
$5.5 $1.1 $(0.5) $6.3 $3.7 $(5.1)
Working capital (2.8) (1.0) 0.9 (1.8) (0.6) (0.3)
Contract assets 0.1 (0.1) (0.5) 0.6 - -
Other CFOA-b) 2.0 (1.1) (0.4) 0.4 (0.1) 3.3
Gross Capex-c) (2.5) (0.3) (0.5) (1.1) (0.5) (0.1)
Free Cash Flow* $2.3 $(1.5) $(1.0) $4.4 $2.5 $(2.1)
* Non-GAAP Financial Measure
(a - Aggregates the following: Net earnings (loss), (earnings) loss from discontinued operations, (earnings) loss from GE Capital continuing operations, depreciation of property, plant & equipment,
amortization of intangible assets, & goodwill impairments
(b - Aggregates the following: losses (gains) on sales of business interests, principal pension plans (net), other post retirement benefit plans (net), income taxes (net), & all other operating activities;
excludes deal taxes & GE Pension Plan contributions
(c - Includes additions to property, plant & equipment (PP&E) & internal use software
Non-GAAP reconciliations- Adjusted GE Industrial profit & profit margin
- GE Industrial net-debt
- GE Industrial leverage EBITDA & net-debt/EBITDA ratio
- Adjusted total Corporate operating costs
- Adjusted earnings (loss)
- Adjusted earnings (loss) per share
- GE Industrial free cash flow
- Free cash flow by segment
- BioPharma free cash flow
- Gas Power fixed costs
- GE Capital adjusted continuing earnings & segment assets ex-liquidity
- 2020 operating framework
49
(Dollars in millions) 4Q'19 4Q'18 V% 2019 2018 V%
GE total revenues (GAAP) 24,460$ 24,437$ - % 87,719$ 89,038$ (1%)
GE total costs and expenses (GAAP) 23,917 24,966 (4%) 88,118 111,967 (21%)
Less: GE interest and other financial charges 423 642 2,115 2,415
Less: non-operating benefit costs 1,144 608 2,828 2,740
Less: restructuring & other 418 601 1,351 2,832
Less: goodwill impairments 2 162 1,486 22,136
Add: noncontrolling interests (11) 1 6 (130)
Adjusted GE Industrial costs (Non-GAAP) 21,920 22,952 (4%) 80,343 81,714 (2%)
GE other income (GAAP) 1,023 967 6% 2,200 2,317 (5%)
Less: unrealized gains (losses) 917 (193) 793 -
Less: restructuring & other 27 (7) 36 (120)
Less: gains (losses) and impairments for disposed or held for sale businesses (148) 900 4 1,370
Adjusted GE other income (Non-GAAP) 227 268 (15%) 1,367 1,068 28%
GE Industrial profit (GAAP) 1,565$ 438$ F 1,801$ (20,612)$ F
GE Industrial profit margin (GAAP) 6.4% 1.8% 4.6pts 2.1% (23.1%) 25.2pts
Adjusted GE Industrial profit (Non-GAAP) 2,767$ 1,753$ 58% 8,743$ 8,392$ 4%
Adjusted GE Industrial profit margin (Non-GAAP) 11.3% 7.2% 4.1pts 10.0% 9.4% 0.6pts
Non-GAAP reconciliation: adjusted GE Industrial profit & profit margin
We believe GE Industrial profit & profit margins adjusted for the items included in the above reconciliation are meaningful measures because they increase the comparability of period-to-period
results
* Non-GAAP Financial Measure
50
(Dollars in millions) December 31, 2019 December 31, 2018
Total GE short-term and long-term borrowings (GAAP) 52,059$ 62,212$
Less: GE Capital short-term and long-term debt assumed by GE 31,368 36,262
Add: intercompany loans from GE Capital 12,226 13,749
Total adjusted GE borrowings 32,917 39,700
Total pension and principal retiree benefit plan liabilities (pre-tax)(a) 27,773 26,836
Less: taxes at 21% 5,832 5,636
Total pension and principal retiree benefit plan liabilities (net of tax) 21,941 21,200
GE operating lease liabilities 3,369 3,868
GE preferred stock 5,738 5,573
Less: 50% of GE preferred stock 2,869 2,787
50% of preferred stock 2,869 2,787
Deduction for total GE cash, cash equivalents and restricted cash (17,613) (16,632)
Less: 25% of GE cash, cash equivalents and restricted cash (4,403) (4,158)
Deduction for 75% of GE cash, cash equivalents and restricted cash (13,210) (12,474)
Total GE Industrial net debt (Non-GAAP) 47,886$ 55,081$
Non-GAAP reconciliation: GE Industrial net-debt
a) Represents the total net deficit status of principal pension plans, other pension plans & retiree benefit plans.
In this document we use GE Industrial net debt*, which is calculated based on rating agency methodologies. We are including the calculation of GE industrial net debt* to provide investors
more clarity regarding how the credit rating agencies measure GE Industrial leverage.
* Non-GAAP Financial Measure
51
(Dollars in millions) December 31, 2019 December 31, 2018
Total GE Industrial net debt 47,886$ 55,081$
Total GE Industrial leverage EBITDA 11,286$ 11,567$
GE Industrial net debt/EBITDA ratio 4.2x 4.8x
GE INDUSTRIAL NET DEBT/EBITDA RATIO
(Dollars in millions) December 31, 2019 December 31, 2018
GE earnings (loss) from continuing operations before income taxes (GAAP) 1,271$ (21,100)$
Less: Interest and other financial charges (2,115) (2,415)
Less: Depreciation and amortization of PP&E and amortization of intangible assets (3,513) (4,399)
Less: GE Capital earnings (loss) from continuing operations (530) (489)
Less: Non-operating benefit costs (2,828) (2,740)
Less: goodwill impairments (1,486) (22,136)
Less: Other items(a) 739 815
Add: Disposition related adjustments(b) 282 1,303
Total GE Industrial leverage EBITDA (Non-GAAP) 11,286$ 11,567$
GE INDUSTRIAL LEVERAGE EBITDA
Non-GAAP reconciliation: GE Industrial leverage EBITDA & net-debt/EBITDA ratio
a) Other items is mainly comprised of adjustments for other income, long-term fixed operating lease expense & stock-related compensation expense.
b) Includes Transportation’s EBITDA in 2018 & the BKR dividend in both 2018 & 2019.
In this document we use GE Industrial leverage EBITDA*, which is calculated based on rating agency methodologies. We are including the calculation of GE Industrial leverage EBITDA* to
provide investors more clarity regarding how the credit rating agencies measure GE Industrial leverage.
* Non-GAAP Financial Measure
52
Non-GAAP reconciliation: adjusted total Corporate operating costs
a) Related to our mark to market impact on our Baker Hughes shares for 2019.
Adjusted total corporate operating costs* excludes gains (losses) on disposals & held for sale businesses, restructuring & other charges, unrealized gains (losses) & goodwill impairments. We believe
that adjusting corporate costs* to exclude the effects of items that are not closely associated with ongoing corporate operations provides management & investors with a meaningful measure that
increases the period-to-period comparability of our ongoing corporate costs.
(Dollars in millions) 2019 2018 V%
Revenues
Corporate revenues 1,791$ 2,783$ (36%)
Eliminations and other (2,096) (2,110)
Total Corporate Items and Eliminations (305) 673 U
Operating profit (cost)
Gains (losses) on disposals and held for sale businesses 4 1,370
Restructuring and other charges (1,315) (2,952)
Unrealized gains (losses)(a) 793 -
Goodwill impairments (1,486) (22,136)
Adjusted total corporate operating costs (Non-GAAP) (1,693) (1,255)
Total Corporate Items and Eliminations (GAAP) (3,698) (24,973) 85%
Less: gains (losses) and restructuring & other (2,004) (23,719)
Adjusted total corporate operating costs (Non-GAAP) (1,693)$ (1,255)$ (35% )
2020-2021 Adjusted total Corporate operating costs: We cannot provide a reconciliation of the differences between the non-GAAP
expectations and corresponding GAAP measure for adjusted total corporate operating costs* in 2020 or 2021 without unreasonable effort
due to the uncertainty of timing of any gains or losses related to acquisitions & dispositions including our agreement to sell our
BioPharma business, the timing and magnitude of the financial impact related to the mark-to-market of our remaining investment in
Baker Hughes, and the timing and magnitude of restructuring expenses. Although we have attempted to estimate the amount of gains
and restructuring charges for the purpose of explaining the probable significance of these components, this calculation involves a
number of unknown variables, resulting in a GAAP range that we believe is too large and variable to be meaningful.
* Non-GAAP Financial Measure
53
(Dollars in millions) 4Q'19 4Q'18 V% 2019 2018 V%
Consolidated earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 663$ 509$ 30% (44)$ (21,438)$ F
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 69 (86) F (530) (489) (8%)
GE Industrial earnings (loss) (Non-GAAP) 594 595 - % 486 (20,949) F
Non-operating benefits costs (pre-tax) (GAAP) (1,144) (608) (2,828) (2,740)
Tax effect on non-operating benefit costs 240 128 594 575
Less: non-operating benefit costs (net of tax) (904) (481) (2,234) (2,165)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) (148) 900 4 1,370
Tax effect on gains (losses) and impairments for disposed or held for sale businesses 31 (186) 34 (380)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) (117) 714 39 990
Restructuring & other (pre-tax) (391) (609) (1,315) (2,952)
Tax effect on restructuring & other 85 66 277 338
Less: restructuring & other (net of tax) (306) (543) (1,039) (2,614)
Goodwill impairments (pre-tax) (2) (162) (1,486) (22,136)
Tax effect on goodwill impairments - 11 (55) (235)
Less: goodwill impairments (net of tax) (2) (151) (1,541) (22,371)
Unrealized gains (losses) (pre-tax) 917 (193) 793 -
Tax effect on unrealized gains (losses) (140) 41 (114) -
Less: unrealized gains (losses) (net of tax) 777 (153) 679 -
Debt extinguishment costs - - (255) -
Tax effect on debt extinguishment costs - - 53 -
Less: debt extinguishment costs (net of tax) - - (201) -
BioPharma deal expense (pre-tax) - - - -
Tax on BioPharma deal expense (633) - (647) -
Less: BioPharma deal expense (net of tax) (633) - (647) -
Less: GE Industrial U.S. tax reform enactment adjustment - 17 (101) (38)
Adjusted GE Industrial earnings (loss) (Non-GAAP) 1,779 1,192 49% 5,531 5,249 5%
GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 69 (86) F (530) (489) (8%)
Insurance premium deficiency test charge (pre-tax) - - (972) -
Tax effect on insurance premium deficiency test charge - - 204 -
Less: insurance premium deficiency test charge (net of tax) - - (768) -
Less: GE Capital U.S. tax reform enactment adjustment - (128) 99 (173)
Adjusted GE Capital earnings (loss) (Non-GAAP) 69 43 60% 139 (316) F
Adjusted GE Industrial earnings (loss) (Non-GAAP) 1,779 1,192 49% 5,531 5,249 5%
Add: Adjusted GE Capital earnings (loss) (Non-GAAP) 69 43 60% 139 (316) F
Adjusted earnings (loss) (Non-GAAP) 1,848$ 1,234$ 50% 5,671$ 4,933$ 15%
Non-GAAP reconciliation: adjusted earnings (loss)
* Non-GAAP Financial Measure
54
(Per share amounts in dollars) 4Q'19 4Q'18 V% 2019 2018 V%
Consolidated earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 0.07 0.06 17% (0.01) (2.47) F
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 0.01 (0.01) F (0.06) (0.06) - %
GE Industrial earnings (loss) (Non-GAAP) 0.07 0.07 - % 0.06 (2.41) F
Non-operating benefits costs (pre-tax) (GAAP) (0.13) (0.07) (0.32) (0.32)
Tax effect on non-operating benefit costs 0.03 0.01 0.07 0.07
Less: non-operating benefit costs (net of tax) (0.10) (0.06) (0.26) (0.25)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) (0.02) 0.10 0.00 0.16
Tax effect on gains (losses) and impairments for disposed or held for sale businesses 0.00 (0.02) 0.00 (0.04)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) (0.01) 0.08 0.00 0.11
Restructuring & other (pre-tax) (0.04) (0.07) (0.15) (0.34)
Tax effect on restructuring & other 0.01 0.01 0.03 0.04
Less: restructuring & other (net of tax) (0.03) (0.06) (0.12) (0.30)
Goodwill impairments (pre-tax) (0.00) (0.02) (0.17) (2.55)
Tax effect on goodwill impairments - 0.00 (0.01) (0.03)
Less: goodwill impairments (net of tax) (0.00) (0.02) (0.18) (2.57)
Unrealized gains (losses) (pre-tax) 0.10 (0.02) 0.09 -
Tax effect on unrealized gains (losses) (0.02) 0.00 (0.01) -
Less: unrealized gains (losses) (net of tax) 0.09 (0.02) 0.08 -
Debt extinguishment costs - - (0.03) -
Tax effect on debt extinguishment costs - - 0.01 -
Less: debt extinguishment costs (net of tax) - - (0.02) -
BioPharma deal expense (pre-tax) - - - -
Tax on BioPharma deal expense (0.07) - (0.07) -
Less: BioPharma deal expense (net of tax) (0.07) - (0.07) -
Less: GE Industrial U.S. tax reform enactment adjustment - 0.00 (0.01) (0.00)
Adjusted GE Industrial earnings (loss) (Non-GAAP) 0.20 0.14 43% 0.63 0.60 5%
GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) 0.01 (0.01) F (0.06) (0.06) 0%
Insurance premium deficiency test charge (pre-tax) - - (0.11) -
Tax effect on insurance premium deficiency test charge - - 0.02 -
Less: insurance premium deficiency test charge (net of tax) - - (0.09) -
Less: GE Capital U.S. tax reform enactment adjustment - (0.01) 0.01 (0.02)
Adjusted GE Capital earnings (loss) (Non-GAAP) 0.01 0.00 F 0.02 (0.04) F
Adjusted GE Industrial earnings (loss) (Non-GAAP) 0.20 0.14 43% 0.63 0.60 5%
Add: Adjusted GE Capital earnings (loss) (Non-GAAP) 0.01 0.00 F 0.02 (0.04) F
Adjusted earnings (loss) (Non-GAAP) 0.21$ 0.14$ 50% 0.65$ 0.57$ 14%
Non-GAAP reconciliation: adjusted earnings (loss) per share
* Non-GAAP Financial Measure
55
(Dollars in millions) 1Q'19 2Q'19 3Q'19 4Q'19 2019
GE CFOA (GAAP) (607)$ (460)$ 1,144$ 4,537$ 4,614$
Add: gross additions to property, plant and equipment (552) (565) (480) (620) (2,216)
Add: gross additions to internal-use software (66) (71) (66) (71) (274)
Less: taxes related to business sales (8) (100) (52) (38) (198)
GE Industrial free cash flow (Non-GAAP) (1,216)$ (996)$ 650$ 3,884$ 2,322$
GE INDUSTRIAL FREE CASH FLOW (NON-GAAP), 2019 BY QUARTER
(Dollars in millions) 4Q'19 4Q'18 V$ 2019 2018 V$
GE CFOA (GAAP) 4,537$ 5,159$ (622)$ 4,614$ 701$ 3,913$
Add: gross additions to property, plant and equipment (620) (532) (2,216) (2,234)
Add: gross additions to internal-use software (71) (73) (274) (306)
Less: common dividends from GE Capital - - - -
Less: GE Pension Plan funding - - - (6,000)
Less: taxes related to business sales (38) (90) (198) (180)
GE Industrial free cash flow (Non-GAAP) 3,884$ 4,644$ (759)$ 2,322$ 4,341$ (2,019)$
GE INDUSTRIAL FREE CASH FLOW (FCF) (NON-GAAP)
Non-GAAP reconciliation: GE Industrial free cash flow
We believe investors may find it useful to compare GE’s Industrial free cash flow* performance without the effects of cash used for taxes related to business sales & contributions to the GE Pension Plan.
We believe this measure will better allow management & investors to evaluate the capacity of our industrial operations to generate free cash flow.
* Non-GAAP Financial Measure
56
(Dollars in millions) Power
Renewable
Energy Aviation Healthcare
Corporate &
Eliminations GE Industrial
CFOA (GAAP) (1,849)$ 406$ 5,373$ 3,485$ (6,714)$ 701$
Add: gross additions to property, plant and equipment (358) (297) (1,070) (378) (131) (2,234)
Add: gross additions to internal-use software (66) (11) (73) (90) (67) (306)
Less: GE Pension Plan funding - - - - (6,000) (6,000)
Less: taxes related to business sales - - - - (180) (180)
Free cash flow (Non-GAAP) (2,273)$ 98$ 4,230$ 3,018$ (731)$ 4,341$
2018 FREE CASH FLOW (FCF) BY SEGMENT
(Dollars in millions) Power
Renewable
Energy Aviation Healthcare
Corporate &
Eliminations GE Industrial
CFOA (GAAP) (1,200)$ (512)$ 5,552$ 3,024$ (2,250)$ 4,614$
Add: gross additions to property, plant and equipment (277) (455) (1,031) (395) (59) (2,216)
Add: gross additions to internal-use software (46) (14) (107) (79) (28) (274)
Less: GE Pension Plan funding - - - - - -
Less: taxes related to business sales - - - - (198) (198)
Free cash flow (Non-GAAP) (1,523)$ (980)$ 4,415$ 2,550$ (2,139)$ 2,322$
2019 FREE CASH FLOW (FCF) BY SEGMENT
Non-GAAP reconciliation: free cash flow by segment
We believe investors may find it useful to compare GE’s Industrial free cash flow* performance without the effects of cash used for taxes related to business sales & contributions to the GE Pension Plan.
We believe this measure will better allow management & investors to evaluate the capacity of our industrial operations to generate free cash flow.
* Non-GAAP Financial Measure
57
(Dollars in millions) 2019
CFOA (GAAP) 1,446$
Add: gross additions to property, plant and equipment (123)
Add: gross additions to internal-use software (11)
Free cash flow (Non-GAAP) 1,312$
Non-GAAP reconciliation: BioPharma free cash flow
* Non-GAAP Financial Measure
58
(Dollars in millions) 2020F 2019 V% 2019 2018 V%
Gas Power total costs and expenses (GAAP) (11,900)$ (12,656)$ (6%) (12,656)$ (14,205)$ (11%)
Less: Gas Power variable costs* 9,100 9,551 9,551 10,745
Gas Power fixed costs (NON-GAAP) (2,800)$ (3,105)$ (10%) (3,105)$ (3,460)$ (10%)
Non-GAAP reconciliation: Gas Power fixed costs
We believe that fixed costs* is a meaningful measure as it is broader than selling, general and administrative costs and represents the costs in the segments that generally do not vary with volume.
Segment variable costs* are those costs within our industrial segments that vary with volume. The most significant variable costs would be material and direct labor costs incurred to produce our products
and deliver our services that are recorded in the Statement of Earnings line items of cost of goods and cost of services sold.
* Non-GAAP Financial Measure
59
Non-GAAP reconciliation: GE Capital adjusted continuing earnings & segment assets ex-liquidity
GECAS
EFS
IF & WCS
Insurance
Other continuing
Continuing earnings
Less: insurance premium
deficiency test
Less: tax reform
Adjusted continuing
earnings*
2019
$1,029
121
234
(611)
(1,303)
$(530)
(768)
99
$139
GE Capital segment results (dollars in millions)
y/y
(16)%
42%
(23)%
U
33%
(8)%
U
F
F
GECAS
EFS
IF & WCS
Insurance
Other continuing
Total segment assets
Plus: assets of
discontinued ops
Less: liquidity
Assets ex-liquidity*
4Q’19
$38.0
1.8
9.0
46.3
22.5
$117.5
3.9
19.4
$102.0
GE Capital segment assets (dollars in billions)
y/y
(9)%
(38)%
(43)%
15%
21%
(1)%
(15)%
29%
(6)%
4Q’18
$41.7
3.0
15.8
40.3
18.6
$119.3
4.6
15.0
$108.9
* Non-GAAP Financial Measure
60
2020 ADJUSTED EPS: We cannot provide a reconciliation of the differences between the non-GAAP expectations and corresponding
GAAP measure for Adjusted EPS* in 2020 without unreasonable effort due to the uncertainty of timing of any gains or losses related to
acquisitions & dispositions including our agreement to sell our BioPharma business, the timing and magnitude of the financial impact
related to the mark-to-market of our remaining investment in Baker Hughes, and the timing and magnitude of restructuring expenses.
Although we have attempted to estimate the amount of gains and restructuring charges for the purpose of explaining the probable
significance of these components, this calculation involves a number of unknown variables, resulting in a GAAP range that we believe is
too large and variable to be meaningful.
2020 GE INDUSTRIAL FREE CASH FLOW: We cannot provide a reconciliation of the differences between the non-GAAP expectations
and corresponding GAAP measure for GE Industrial Free Cash flow* in 2020 without unreasonable effort due to the uncertainty of timing
of deal taxes related to business sales.
Non-GAAP reconciliation: 2020 operating framework
* Non-GAAP Financial Measure